BP oil spill: Italy drilling ban hits UK-listed explorer

Italy's plan to restrict drilling offshore after BP's catastrophic oil spill
in the Gulf of Mexico may cause difficulties for UK-listed Mediterranean Oil &
Gas, although larger British explorer Northern Petroleum said it would see
little impact.

Italy is to restrict drilling offshore in the Ionian Sea following BP's catastrophic oil spill in the Gulf of Mexico.

Northern Petroleum, which earlier in June decided to refocus its activities on Italy and the Netherlands, said on Friday the drilling ban would not affect its reported reserves in Italy or the exploration potential of its Southern Adriatic acreage.

Mediterranean Oil & Gas said the Ombrina Mare project, its oil field development, might be affected by the curbs on offshore drilling because the oil reservoir it is targeting is located within the proposed five mile exclusion zone.

The company said it was unsure whether Ombrina Mare would be impacted as it was so far unclear whether the Italian government ruling would apply to permit applications currently pending.

Mediterranean Oil & Gas said it would look at positioning wells outside the exclusion zone which would still enable it to develop Ombrina Mare in case the Italian government ruling does cover pending applications.

In the Gulf of Mexico, Hurricane Alex, the first storm of a hurricane season, made its mark the worst oil spill in US history. It cast more crude into beaches and marshes, leaving BP unlikely to resume cleanup efforts for a fourth day.

BP and US Coast Guard officials said they would probably need to wait until Saturday to put most of their spill-response teams back to work on the water, skimming oil, spraying dispersants, rescuing wildlife and burning petroleum at sea.

Christophe de Margerie, the head of French oil group Total, told the Wall Street Journal he expected the oil industry to face tougher safety rules following the oil spill that could lead to higher oil prices.